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Are Real Estate Flips Still Profitable? Minnesota Market Breakdown + Smart Alternatives

By February 2, 2026Real Estate Pros Show

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Show Summary

In this episode, Dylan Silver welcomes Tim Swierczek, a mortgage loan expert from Minnesota, to discuss the current state of the real estate market in the Twin Cities. They dive into the challenges and opportunities for house flippers, particularly focusing on the competitive nature of the market and the types of properties that are currently viable for flipping. Tim shares insights on the price ranges for new constructions and the potential for distressed properties, emphasizing the importance of understanding market dynamics and having a solid team in place for successful investments.

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    Investor Fuel Show Transcript:

    Tim Swierczek (00:00)
    Yeah, well, I deal a lot with house hackers. I’m sure you do too. And our people on the show would probably that bring with them. And I would say if for those people, I’ve seen a couple of things. The first thing is they tend to overanalyze, right? I think house hacking in the Twin Cities is the best way to get started. I really think that’s probably true nationwide. And for those people, think it’s I think they have to take it’s an extremely important decision, but thousands of people do it per month in each state.

    Maybe more than that, right? Tens of thousands nationwide.

    Dylan Silver (02:02)
    Hey folks, welcome back to the show. Today’s guest, Tim Swierczek is a mortgage loan expert in Minnesota. You can find him and his team at Swierczek.com and across social media. You can also check out his podcast on YouTube, Twin Cities Real Estate Investing. Tim, thanks for taking the time today.

    Tim Swierczek (02:20)
    Thanks Dylan, how’s it going man?

    Dylan Silver (02:23)
    It’s going well, man. And you know, it’s interesting because I’ve had more and more guests from Minnesota. And so I figured, hey, let’s dive into to what good looks like in Minnesota. I’d like to start in the single family home space. For folks who are looking for flips, are flips easy to find, hard to find? Are they penciling out now? And also, if you were flipping, where would you recommend folks look at in Minnesota?

    Tim Swierczek (02:36)
    Okay.

    Yeah. Well, I’d say I have quite a few clients and friends who are flippers and I would say they’re definitely, they’re definitely out there. Like anything, there’s a lot of competition, right? So at the lowest end, the easiest flips, the flips that are not complicated, the ones where you just got a little, paint carpet flooring kind of stuff. That stuff’s very competitive and hard to make money on, hard to, hard to pencil on. You need to be lean and know what you’re doing and

    probably have some competitive advantages there just to be able to compete because margins are small, right? ⁓ When you get into the larger, more complex stuff though, that’s the people I know that are really making money in flips are making their money there and they’re paying their crews on the smaller flips, right? So think of the person, like we just interviewed someone who did 35 flips and…

    Dylan Silver (03:21)
    Yeah.

    Tim Swierczek (03:38)
    It’s fair to say that like some of those flips are just so that he can pay for his crews and keep them going so he can get to something a little more juicy, something with a higher sale price, know, an ARV of higher, mean like 400 or 350 to 400, as opposed to something in the lower range. We do have some low end housing in the Twin Cities, meaning like our entry level price is like maybe 200,000. It’s a very small house in a very bad neighborhood.

    Dylan Silver (04:06)
    Now, what would a brand new home, you know, from like a corporate builder, what’s that selling for right now?

    Tim Swierczek (04:11)
    Oh, yeah,

    new construction, at least in the metro area. I think it’d be hard to hard to find something under under like high fives, like 600,000 is kind of what I would guess. Yeah, somewhere in that five 600,000 range would be like kind of the low end. Most of the stuff I see is a million enough though, for new construction.

    Dylan Silver (04:31)
    So. ⁓

    Tim Swierczek (04:33)
    Because

    that’s where they’re making money, right?

    Dylan Silver (05:22)
    I’m imagining, you because these homes are in the 500,000, and you mentioned Million Up, that there is a space for homes that have been rehabbed, but that are a much more cost-effective price point. So is it feasible to find, let’s say, distressed property acquired for under 100,000 and then have an exit in the 200,000s, or is that very, very rare to do?

    Tim Swierczek (05:45)
    Um,

    that’s rare. So what I would say is you’re seeing stuff with a, a margin. And I’m talking just gross margins here, not, anything sophisticated of around a hundred grand, right? So if you needed an exit sale price of 200,000, you’re probably paying a hundred or thereabouts, maybe even one 10 to get to that house. and there’s not a lot of meat on that bone. If that house needs $40,000 of work and you got 20,000 between realtors costs and holding costs.

    There’s just not much left over, right? So it gets, it gets tight very, very quickly. I probably even underestimated that you’re probably talking 50 to 60 to get that house up to market, you know? So those ones are the toughest ones to make money on. think, ⁓ where I’m seeing people make money is something where they buy, just under 200,000 and they consult for three and a quarter to three 50. That would be like a sweet spot. I think in anything, ⁓ in the, just the bread and butter homes. And then the biggest money I’m seeing is people buying houses like

    Dylan Silver (06:15)
    Right.

    Tim Swierczek (06:42)
    They can find a house on the lake for like 800 grand, put a hundred and 150 into it and sell it for one, two, one, three, something like that. Those are, those are out there as well. And I know people doing that. Not, not many, but I do know people doing.

    Dylan Silver (06:54)
    Now when you’re looking at that, that’s an area that I don’t have experience in is these high end flips. Is this something that they are able to do at scale or because it takes money to get into this deal? And then also are there a massive holding costs associated with holding this property while it’s waiting to sell?

    Tim Swierczek (07:09)
    The people I know that are doing it successfully have been doing it a while and like you have a construction background and work their way up to that. like, for example, there’s a guy in our market, his name’s Corey Wright. He’s worth a look up on social media. He’s doing it, I would say at scale. But again, if you’re doing luxury flips like that, he’s not doing like one luxury flip a month, you know, in terms of sales, right? I mean, he might be adding a couple of months and I don’t know his exact.

    ⁓ I know his gross margins more than I know his net margins, but I mean, I’ve seen checks of a half million bucks in profit after closing, stuff like that. And where he told me, think he made three a, like 390 on that exact deal, right? So the half million was, that was down payment money and such.

    Dylan Silver (07:47)
    I’ve seen it.

    Right.

    I’ve seen in Texas where I’m licensed that flippers, because there’s so much new construction, have basically had to compete with their flips, with new construction. It sounds like this is a different market up there because, you know, are there folks, more folks getting into new construction up there or are pretty much flippers staying in their lane and new construction is totally separate from that?

    Tim Swierczek (08:04)
    sure.

    Yeah, you don’t see much of that. Yeah, that’s not very common around here.

    As a general rule, think most people are staying in their lane and not going back and forth. Our new construction market’s a little tricky. Our costs are high to build ⁓ and our governments don’t like building very much. And least in the metro area, there’s not a lot of space to do it. There’s some infill stuff. There’s some stuff going on. I’m aware of a builder. He’s a friend of mine in the Twin Cities building ⁓ new construction duplexes, six-bedroom, ⁓ four-bath duplexes.

    for right around a half million bucks a little bit over somewhere somewhere between five and five fifty right now actual sale price those are in Those are in lowish income neighborhoods lot prices are cheap for him to get to that price But his competitions in the seven seven fifty range ⁓ And so I think it’s a pretty good value

    Dylan Silver (09:11)
    Are you seeing the urban sprawl, if you will, of the Twin Cities increase and so surrounding areas maybe become more populated or towns start to emerge?

    Tim Swierczek (09:22)
    Yeah, yeah. ⁓ know, like the towns that used to be considered rural or, you know, well, rural and far away have grown as the cities have come out, they’ve gotten closer to the cities. So like you call them bedroom communities, right, where people will live there and then drive in for work and stuff. then with, you know, Zoom and everything else, mean, obviously a lot of people aren’t even driving into work. So, yeah, we’re seeing bigger communities or smaller communities become bigger communities for sure. And just kind of morph into the whole city’s area.

    Dylan Silver (09:45)
    Yeah.

    Now, is there also a lot of new construction happening out there right now? Is that a target of it or is that just happening kind of progressively?

    Tim Swierczek (10:31)
    Yeah.

    well, maybe not a target, maybe progressively, but that’s where the new construction is. It’s just I wouldn’t say it’s rampant. We are, you know, we don’t have a what I would call a vibrant ⁓ Texas style ⁓ new construction industry. Ours is a little more muted for sure, in my opinion anyway. And it focuses on really like very a lot of luxury high end stuff, right? Like lots of one. Well, depending on your market, but like for us, one one million and up kind of stuff.

    Dylan Silver (10:47)
    Right.

    And if…

    Tim Swierczek (11:03)
    You know, one, two, one, three, one, four, that kind of thing.

    Dylan Silver (11:06)
    Is there a reason for that? that because there’s not, you know, huge net positive migration to the Twin Cities and so that expansion isn’t maybe justified?

    Tim Swierczek (11:16)
    You might be onto something, but I don’t know. think it might be a little closer to government regulation than anything. And the economics of building a new construction house in our area, at least, are such that I think that if you don’t build inexpensive like that, then there’s just not the margins there. I think it’s very difficult to make a margin on, let’s say, a $500,000 house, especially if it’s a standalone single family as opposed to some form of a uh you know

    um townhome or something like that. I mean, townhomes, can make plenty of money at that price range. ⁓

    Dylan Silver (11:48)
    Do you have a

    Do you have experience

    either at the auctions up there or working with folks who’ve been to the auctions and how do those auctions work up there? Are they online, in person? there, you know, the seller has to get access to their equity? I’ve heard that happening in certain states.

    Tim Swierczek (12:04)
    Um, you know, I don’t I don’t have a great I don’t have a great answer for you Dylan. So I probably would pass on that one. Sorry, I mean to ruin the pipe, but like, I know some people who do it, but I don’t have a good feel for that market. That would be an area of weakness for me.

    Dylan Silver (12:11)
    That’s okay.

    Let me pivot a bit here then. I would like to talk about first time buyers because wherever you are in the US, there’s people who would like to get into the on-ramp of real estate investing. And I know from personal experience being a realtor that the lender really makes and breaks the deal, not just for me, but for everyone involved. And especially if you’re a younger person and you’ve gone to one lender and they told you, you can’t get qualified, that kind of bums you out and you think, well, I guess I’m not getting a home.

    Tim Swierczek (12:48)
    I totally.

    Dylan Silver (12:48)
    there any

    ⁓ specific advice that you would have for folks who may be looking at homes in Minnesota, especially first time buyers?

    Tim Swierczek (12:56)
    Yeah, well, I deal a lot with house hackers. I’m sure you do too. And our people on the show would probably that bring with them. And I would say if for those people, I’ve seen a couple of things. The first thing is they tend to overanalyze, right? ⁓ I think house hacking in the Twin Cities is the best way to get started. I really think that’s probably true nationwide. ⁓ And for those people, think it’s I think they have to take it’s an extremely important decision, but thousands of people do it per month in each state.

    Maybe more than that, right? Tens of thousands nationwide.

    And I think you can do it as long as you have a good team, right? ⁓ If you have a good team and you ⁓ learn your properties, if you’re worried about it, I think the best thing I’ve come up with, and here’s how I’d answer that question. I came up with this type of analyzing I call bulk analyzing. Not a great name, I think, but really a great concept. And that is, like most people when they analyze properties, they analyze properties as they come on the market.

    But Dylan, what do you get when you analyze a property on the market? You get random, right? You get a three bedroom duplex in one area. You get a four bedroom in another, a five bedroom in another, and at different quality levels and different neighborhoods and all these different factors, and it becomes very random. But if I just told you, hey, Dylan, look at the last 100 sales or just the last 12 months of sales in your metro area.

    What does that look like? You can start to see patterns then, right? You download the list of sales, you know what the house is sold for. You can start to look at the outliers, the high, the low, and also the number of transactions. So if you wanted to buy in the Twin Cities metro area, almost all of the transactions, 85 % of the transactions or more are Minneapolis and St. Paul for multifamily. Once you start to realize that and you say, I want to live in, let’s say Hopkins, Minnesota, you might find that there were two all of last year.

    Well, if you see one you like, you better buy it, right? You don’t want to underbid on that one because there’s going be another one, because no, the answer is there’s going be a second one and that one might be in bad condition or you might not like it, right? So analyzing that way I think is the best way to get ahead.

    Dylan Silver (15:42)
    Now for folks who are looking at house hacking, let’s say buying a duplex or a triplex, quadplex, right? Would lenders look favorably upon that if they go and say, hey, I plan to house hack this, or does that not factor into the arithmetic? The only thing that they’re looking at is, hey, what’s your score and can you make the payment?

    Tim Swierczek (15:49)
    Yeah.

    Well, mean, so if you’re I guess if I’m interpreting your question, I would say they do look at because we look at the rent, right? So we look at 75 percent of the rent of the unit, the person is not living in the one they’re renting out and count that towards their income. So if you were coming to me and you wanted to qualify for a house, you qualify for more and more expensive house in a better neighborhood as a house hack multifamily than you would as a single family.

    Dylan Silver (16:31)
    Now do you, this is an interesting area of conversation. No, no. Yeah. Because,

    Tim Swierczek (16:33)
    Is that what you meant or did I answer that incorrectly?

    Dylan Silver (16:38)
    When people talk about house hacking, one of the things that I’d say is challenging for people, or they kind of get stopped on this, is you may go to a lender who’s gonna evaluate this as if you’re paying for the whole thing. And I’ve heard of that before, but you’re talking about adding that as income. Can you walk us through that process? Does someone already have to have a prospective tenant lined up before they go into this? How does that work?

    Tim Swierczek (17:01)
    Yeah, not at all. So with with a few rare exceptions, you can use the rent, the proposed rent by the by the appraiser on the property or the unit you’re not living in. So again, let’s just say duplex. You buy it. You’re to live in one side rent out the other. The other side, let’s say, is worth 1600 a month in rent will give you 75 percent of that 1600 towards your income. We like add it like it’s a second job. And then we figure out debt to income based on that. And that can really impact someone’s ability to purchase.

    It can take them from a neighborhood they don’t want to live in to a neighborhood they do want to live in, or it can take them from being cash strapped every month to having an extra $1,000 a month or more, well $1,600 a month in potential net income.

    Dylan Silver (17:49)
    Now, this is another question. again, this is just based on my pure, how green I am when talking about this. Are there ever instances where a lender might say, hey, we will approve you for this and we’ll give you the extra income, but we need to vet the tenant before that day came in? Would that ever happen or is it really upon the operator at that point?

    Tim Swierczek (17:56)
    Yeah.

    Yeah, it’s upon the operator. We don’t get into that. We don’t vet tenants. We don’t look at any of that. No. Matter of fact, we look at what’s the potential tenant, right? So again, going back to your question, just in case I didn’t make it clear, you don’t have to have a tenant at all. It can be completely vacant. As a lender, we have to rely on what the appraiser says the rent should be. And sometimes that can be a detriment, Dylan because someone can come to me, the rent could be $1,600. But if the appraiser says $1,450, that’s the number I have to use if there’s no tenant there now.

    If there’s a tenant there now signed at $1,600, we can usually make that argument and they’ll usually come in at $1,600. But in the cases where there’s ambiguity, then you want to have a good team. And what I would do is if we were working together and you had a client who was buying a house that… ⁓

    we were uncertain to where the appraiser would come in on rent. I would actually have you ⁓ get comps for us, rental comps, and I would help with that. We would give those to the appraiser before the appraisal happens so that the appraiser knows where we think it should stand. Now we can’t influence them directly, but indirectly we can give them the knowledge because the thing people have to understand about appraisers is they’re used to valuing the house. They’re not so used to valuing the rent. So I think they do a poorer job at that, unfortunately. I mean,

    Dylan Silver (19:18)
    Yeah.

    Tim Swierczek (19:21)
    being truthful to the situation, think they lack the motivation to really get high rents. just kind of, I think in often cases, throw in a low end number. So it does require some skill and some participation by your professionals, right? Your realtor and your loan officer.

    Dylan Silver (19:38)
    What, I guess, I don’t know how this process works, but once an appraisal is done and you feel like, we don’t necessarily agree with this, could you order another one or does that first one stick no matter what?

    Tim Swierczek (19:49)
    For the most part of six, no matter what, there are situations, but you’d have to see kind of like gross negligence, right? ⁓ In most cases, especially when it comes to the rent side of it, ⁓ or actually really both sides. I mean, there are situations, I would say every single year we do order second appraisals on properties, but we got to see that there’s something severely wrong. Not just the value didn’t come in. ⁓ The value didn’t come in and there’s a lot of data that supports that this was incorrect, right? Something like that.

    Dylan Silver (20:11)
    Yeah.

    Now

    When we talk specifically about this process, right, of getting into the duplex, or triplex, small multifamily, right? One of the things that comes to mind is, hey, I’m bringing in, let’s call it $1,600 from the other side, right? So some of that can count as my income, but then I’m gonna be paying some multiplier of that as my mortgage premium. How much of that other unit will cover the total duplex in most cases?

    Tim Swierczek (20:28)
    Yeah.

    Well, the in Minnesota specifically, because I do lend in other states in Minnesota, what I see is ⁓ most people have have another thousand dollars they have to cover per month, maybe 1200 1500, something like that. So it’s covering half or more of the mortgage payment. In most cases. And then once per year, we say someone who really scores, right? And you’ll see someone who is close to zero. ⁓ And other times you see someone who is just like, they’ve got the money, they don’t care.

    Dylan Silver (21:05)
    Okay, and then, and the.

    Tim Swierczek (21:17)
    They bought in an awesome neighborhood and they’re still paying $2,500, $3,000 a month, but they’re in a really cool place.

    Dylan Silver (21:21)
    Now,

    are these plays where you’re seeing heavy appreciation either year to year or every couple of years and people are looking at in some cases maybe even exiting out of them or burying into another property? Or is this a type of thing where you may be looking at this really a long term hold?

    Tim Swierczek (21:37)
    Yeah.

    Well, OK, so I think that I would say this over the last couple of years, it’s been modest, but still there, we see appreciation. Minnesota is one of the better appreciation markets over the last, like, let’s say couple of years. Right. I’m really talking during this this uptick in rates. We’ve seen some good appreciation, but not like we used to. So if you’re just judging over the past couple of years, I have to say it’s more long term. But most of my clients bought, you know.

    several years ago and they saw just massive appreciation, then still modest appreciation now. And then, you we always downplay it, but they still get loan pay down. And most people think that’s nothing, but it’s still, I mean, on the average house in the Twin Cities, would say six, $7,000 a year in loan pay down, right? Due to loan size and interest rates, right? That’s a fairly common number. So you add that up over a decade. If you are talking long-term, you’re still talking $60,000, $70,000 just on loan pay down alone.

    Dylan Silver (22:40)
    Can you also, if you’re going to be residing in one of the units, can you take advantage of like first time buyer programs for a duplex or would that only apply if it was yours and not anyone else on the other side?

    Tim Swierczek (22:46)
    Yeah.

    Yeah, most loan programs and this is going to vary per per state, but from what I’ve seen nationwide, Most of the first time homebuyer programs are limited to one or two units. So when people come to me and they want three or four, that’s not usually going to work. But

    Outside of that, ⁓ one and two unit properties, they’re pretty wide open. There are still limited programs on three or four units, but that’s more like low down payment programs, not grant money, not free down payment system money that can like.

    Dylan Silver (23:17)
    Now, from what I understand, DSCR loans cannot be used if you’re going to be in the property. Is that accurate so you would not be able to use it if you’re house hacking?

    Tim Swierczek (23:25)
    Yeah, that’s accurate.

    Yeah, correct. And you really wouldn’t want to because most of the DSCR loans, so the beauty of house hacking is low down payments, low interest rates, right? In those programs, you probably all heard of them. There’s a conventional 5 % down loan program that’s great for multifamily. Again, not talking single family here. You can go less on single family. And there’s a 3.5 % down FHA and then zero down VA. And if you’re going single family, zero down USDA.

    I’ve never looked at them as a multifamily, but most of those areas don’t have a lot of multifamily. So there are great programs there that you have very low down. If you’re having an income issue, DSCR loans work, they’re typically going to be 15%, 20%, 25 % down. There’s a lot of factors there, but they certainly start at 15 and go up from there. And if you’re talking multifamily, they’re really starting at 20 % going up.

    Dylan Silver (24:19)
    We are coming up on time here, Tim. ⁓ Any new projects that you’re working on, and also what’s the best way for folks to reach out to you or your team?

    Tim Swierczek (24:21)
    Yeah.

    Yeah, yeah. Well, I’m always kind of looking at projects. I’ve got a couple that are coming full circle. I’m going to be buying some more. And I do think like I’m going to be looking at those flips, those flips and even some burrs. I like the new construction market that you mentioned. There is actually that $500,000 duplex ⁓ builder. I’m looking at doing some stuff with him. So I haven’t zeroed in on what exactly what I’m doing next, but there’s some stuff going on there.

    Something I’ll bring up because it’s my one chance. I have a 15 % down two to four unit investment property loan that like no one else has in the country. I just did an Indianapolis $600,000 fourplex with 15 % down for example, and the guy’s making money. So if you’re out there, I can lend in 45 states. That’s my little pitch.

    If you want to reach me, my email is my name, [email protected] Hopefully that’ll be in the show notes. And my phone number is probably a little easier to mention here. It’s 651-772-9000.

    Dylan Silver (25:27)
    Tim, thank you so much for coming on the show today.

    Tim Swierczek (25:30)
    Yeah Dylan, thanks so much buddy.

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